business secret blog

Independent contractors and independent consultants receive a form called a 1099. This is probably the most advantageous part of being employed by someone else. They must pay unemployment tax. Some loan companies and retailers who offer credit will also accept a W-2 as proof of income. Those who are employed by a company have many advantages over those who are self-employed. Employees are also often offered benefits like health insurance and retirement packages. According to the IRS, a company “has the right to control or direct only the result of the work [of an independent contractor] and not what will be done and how it will be done or method of accomplishing the result.” Although the IRS uses a “20 questions” test to determine whether a worker is an employee or contractor, in general, under this definition, those whose method of working can be controlled by their employer are regular employees and receive a W-2. The government gives aid to those who have lost their jobs and are trying to find work in the form of unemployment benefits. Most of the time, their company goes in on these services with them in order to offset some of the cost. Any freelancer can attest to the high cost of private health insurance and saving plans. Technically, these taxes are deducted from the employee’s salary, but the employer is required to collect them and send them to the IRS on the behalf of the worker. At the end of a tax year, employers are required to fill one out and give it to their employees.